To gauge the impact of the COVID-19 disruption, Trepp has applied an economic and real estate forecast scenario to a portfolio of 12,500 commercial real estate loans.
The findings were perhaps to be expected: defaults are expected to increase, in some cases significantly.
Under the scenario Trepp used, the cumulative default rate across commercial mortgages overall will rise to 8%, up significantly from the current 0.4% default rate. The impact will be most immediate and severe in the lodging sector, with a cumulative default rate approaching 35%.
Read more...CRE Loan Defaults Soar Under Trepp Stress Test But Won’t Be as Bad as Great Recession via GlobeSt